South Africa Exceeds Tax Target to Keep Budget Gap at About 4%

South Africa will meet or beat its budget deficit target of 4 percent of gross domestic product in the fiscal year that ended yesterday after collecting more tax than anticipated, Finance Minister Pravin Gordhan said.

The South African Revenue Service collected 899.7 billion rand ($85 billion) of taxes in the year through March 31, more than its February target of 899 billion rand, Gordhan told reporters in Johannesburg today. The final budget gap will only be known once data on government spending is finalized.

“The extra revenue we got in this financial year gives us an opportunity to start consolidating our fiscal position and reducing the amount of money we have to borrow,” Gordhan said.

A weaker rand helped to boost company tax collection from exporters and trade-related receipts, the minister said. The currency slumped 16 percent against the dollar in the fiscal year and dropped 0.6 percent to 10.5906 as of 1:16 p.m. in Johannesburg today.

The government plans to narrow the budget deficit to 2.8 percent of GDP in the fiscal year ending in March 2017 from an estimated 4 percent this fiscal year.

“These sorts of tax collections achievements in the face of global uncertainty and inadequate growth in the South African economy is good, but ultimately its better growth and better employment numbers that will give us the opportunity to spend more on the right things and get value for money,” Gordhan said.

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